FCC To Propose Change To Net Neutrality Rules, Media Report

The Federal Communications Commission is expected to put out new Internet traffic rules tomorrow that will change the practice of net neutrality. Joining me now to talk about that is Wall Street Journal reporter Gautham Nagesh, who covers the FCC. Gautham, welcome.

NAGESHI: Sure. Net neutrality is the concept that broadband or Internet service providers must create all Internet content equally. They can't pick and choose which websites they will allow users to access or speed up and slow down certain websites. Actually, in practice, there is no net neutrality today. If you ask the broadband providers, they say that they abide by that concept but there are not rules dictating that they have to because those rules were struck down in court in January.

BLOCK: OK. So, under the new proposed rules that the FCC is expected to put forth tomorrow, what would change?

NAGESHI: So, basically, the FCC in their proposal is going to say that broadband providers still, they can't block any websites, they can't slow anyone down but what they can do is enter into agreements with content providers, companies that offer video phone, other types of services, consumers, they can take payment in exchange for preferential treatment. That could be faster access or prominent placement on the home screen of your cable box or something like that. But there is an opening to strike deals, and to many people that means this is no longer net neutrality.

BLOCK: Yeah. I'm seeing a bunch of commentary on Twitter talking about, like, net neutrality finally dies at the ripe old age of 45. This is the death of the open Internet system. What about the impact on consumers?

NAGESHI: So, it's debatable, of course, in the short-term, I don't think you will see much change in how consumers experience the Internet. If you think of the Internet as something you get over a web browser, I don't think that will change significantly because they're not allowed to block or slow down websites, as I said. In the long-term, what you may see a shift towards offering more aspects of online communication as a service, for which there would be a separate fee. So, for example, right now, if you want to watch videos over your Internet connection, you don't buy a special Internet connection. You just buy a standard Internet connection and you either subscribe to a service like Netflix or Hulu or you just watch free videos on YouTube and other sites. Under this new change, YouTube or Hulu or Netflix could foreseeably pay a Verizon or a Comcast or something like that in order to reach consumers faster. So, their service might be a little bit better over your Internet connection and that might drive more consumers to it. Again, the concern is then the big companies, it would be harder for new companies or startups who can afford to pay for preferential treatment to compete for those sorts of services.

BLOCK: And isn't it likely that some of those costs will ultimately get passed onto the consumer for that fast lane that you're talking about?

NAGESHI: Sure. Well, that is, of course, another concern. Broadband prices in general are very high and rising and cost is a major factor for the people who do not subscribe to broadband. And so we don't see that trend stopping. And this will certainly not do anything to slow it down. Whether or not those costs will be passed directly to the consumer in price increases or additional fees, we do not know. On the other hand, you may see enough packages emerge where some folks might choose to assemble some combination of services they're paying for independently rather than the large flat fee they usually pay for Internet access.

BLOCK: Gautham Nagesh covers the FCC for the Wall Street Journal. We were talking about the FCC's proposal to be released tomorrow that will change the rules for net neutrality. Gautham, thanks so much.